June 11, 2009

Health Care Factoid

--by Sebastian

We spend a lot of money on health care in the United States. About 15% of GDP, in fact. Quite a few countries get universal health care with much less than that. And as we all know, the US doesn't have universal government coverage.

But the overall figure hides another very important figure. The US government already spends about 6.6% of GDP on health care. The interesting thing about that number is that it is about what the governments of most other Western countries spend on health care for their much more universal systems. The OECD average is only 6% of GDP. The UK spends 6.4% for their universal system. Canada spends 6.7% for their universal system.

Essentially the US government already spends enough money to have a universal system, but only actually covers about 27% of the population.

And this isn't a story of the triumph of the free market in the US. The private sector spends 8.1% of GDP and covers only 69% of the population. 8.1% of GDP is enough to cover the universal public spending of every country other than Germany. And with Medicare and Medicaid taking many of the oldest and sickest patients, the private systems aren't even necessarily covering most of the expensive patients.

So what is going on here? Both the government and the private sector already spend more than enough money on their own to each cover the expenditures of a universal system. I honestly don't know. But I find it surprising that the fact that our government already spends enough money to cover the universal systems of almost any other Western nation doesn't get discussed much. It has enormous policy repercussions for both sides of the debate (universal health care advocates might want to examine why the government doesn't already provide universal health care considering the money it spends, and private health care advocates should do the same).

My guess is that 3 things contribute to the discrepancy: doctor salaries (much higher in the US), futilely spending too much on that last month before death (anecdoteally much higher in the US, I'd love to see useful comparison statistics), and overuse of the system by the middle class which has private insurance, for trivial matters because they don't see the costs other than a copayment. But this is just a guess. I don't really know, because for whatever reason the discussion of "why don't we have universal health care, our government and private systems EACH spend enough for it compared to other countries" hasn't been raised.

UPDATE:

Just to head it off, here are some things that don't explain it.

Drug costs. They are higher in the US, but the main reason people complain about them is because it is the one area where the average person is exposed to the true cost of health care. In fact they only represent about 10% of overall health care costs.

Medicare has the oldest and sickest people. This is probably true, but doesn't change the fact that the governments of other countries cover their oldest and sickest 27% plus every other person in their country for about the same cost as the US government covers only 27% of the population.

Administrative costs. Same cite as Drug Costs suggests 7% administrative costs (and depending on what other professional services means that may be 17%). In either case you have to realize that other countries have administrative costs (so this number isn't going to zero) and that even if it were all waste, it doesn't come close to covering the gap. Private plus public spending in the US is more than double that of other countries. Admin costs would have to be almost 60% of total spending to make that up. Whatever the exact number is, it isn't anywhere near that.

1. High usage of ERs by people who don't have insurance and access to primary care physicians.

2. A long standing tradition (slowly and positively changing) by insurance companies of focusing on needed care rather than preventive care.

3. The typical American philosophy of "If I want it I should be able to have it" resulting in utilization of high tech care when not necessary.

4. Over competition between hospitals to the point where every hospital has all the latest high tech imaging equipment, cardiac care equipment, etc. (Okay not every hospital). As a result, a lot of this high cost equipment stands unused for a fair amount of time.

5. Insurance companies first denying care, then eventually approving care. This results in higher administrative costs and, usually, higher cost of the care when it is finally received.

6. Insurance companies dictating the actual progression of care to too great a degree. I had neck surgery a while back and the only reason it was allowed without trying other treatments first is that my MRI was a total wreck. A spinal cord in the shape of an S tends to result in fast treatment. Howeverm, if it had been to any less a degree I would have had to go through physical therapy and other treatments, even though most of the time the end treatment remains the same.

Having worked on the managed care side, and having to follow specific guidelines as to what treatments I approved, this is one area in which I know whereof I speak.

I could go on, but in addition to what Sebastian lists, I think these are all contributing factors.

What about quality of health care? Are those other countries spending less because they're getting less quality health care? I've heard of Canadians coming to the US for their more serious procedures. Spending less on health care sounds good, but can we spend less and provide universal cooverage without significantly sacrificing quality?

We could start by figuring out a way to lower the cost of actually becoming a doctor and plunging people deep into debt. I'm not entirely sure of the specifics of medical school cost and debt, but I'm assuming it's quite similar to the cost of law school debt. If that's the case (and anyone, by all means, feel free to correct me), I think the law school comparison is particularly instructive.

Law school isn't just expensive - it's absurdly expensive. I suspect that law school was never exactly cheap, but my theory is that as the ABA started issuing accreditation to more and more mediocre schools, those mediocre schools began charging similar prices to elite-level institutions. This probably allowed elite-level institutions to increase their tuition costs.

The result, no matter where one ends up on the "law school tiers" at this point, is a typical law student ending up $100,000+ in debt, minus some mitigating circumstances - particularly excellent performance resulting in scholarship or a really rich mommy and daddy.

To pay off that debt, students have to take relatively high paying jobs that are not nearly commensurate with their actual value and experience. In order to attract those "high prestige/high value" students, major law firms offer perks and obscenely high salaries for work that, for the first several years, amounts to highly trained document review. Those costs, necessary only for the purposes of "retaining talent" and not actual value, need to be covered somehow. That, in turn, increases the bill to the client. It's one clear reason why legal services are nearly impossible to achieve for a realistic price and why it is often more beneficial for clients to settle disputes rather than engage is overwhelmingly expensive litigation.

So what's my general point? As I would imagine is true with the medical profession, if law school was more reasonably priced for the average student, then those salaries could be reduced. As a side note, quality of work/life balance for lawyers would surely rise.

Full disclosure: I'm a rising 3rd year student at a top 100 New York City law school. I don't work in BigLaw, but at a highly sought after and competitive government job where I will hope to find employment post-graduation. Highly sought after government jobs don't offer the same salary as BigLaw, but there are some incredible benefits (including being able to be a real human being most of the time after 6 PM on Friday evenings) and tuition reimbursement programs. Despite that, I'd like to think my theories are still relevant :)

I'm having trouble remembering where I heard this analysis, but I think the idea is that government health care (with the exception of the VA) largely utilizes the private health care market (private doctors, procedures, etc.).

This market, in turn, passes along its hyperinflation to the government -- which, as a general rule, don't even negotiate for lower prices.

So, in this analysis, the problem of high government spending on health care stems directly from the the hyperinflation of the private health care sector.

I think the article Hilzoy linked to makes the situation admirably clear, while inexplicably refraining from pointing out the moral:

The National Health Service in the UK is run like the Mayo Clinic in the US.

Hence, the NHS achieves better-quality results than the US, for lower costs.

Or, put in short form: requiring health care systems to be run profitably ensures that they will be run expensively. If you want best-quality healthcare at lowest cost, you need socialized health care: nothing else will do it.

England’s UH is based on rationing.
France’s is based on controlling costs.

The VA here in the states does both, and it does it to great effect. Patients fight to get into VA care. The patients are really hurting. But they get both great and inexpensive care.

When you get into the VA, your records are electronic, your doctor may change but he can read all your records, the doctors have a limited budget to work with, and the doctors are salaried, so they have no incentive to do needless medical tests.

Whereas, Medicare sucks because while we limit payments (control costs), it works within the current system, so doctors have ever good reason to do unnecessary shit they can bill for.

So here’s my point, before we go trying to push all people satisfied with their healthcare into some universal thing…. why not:

1. Turn the Medicare system into a VA-style system.
2. Use the new VA-style system to cover all the uninsured.

This would give us a tremendous first step toward electronic record keeping, we’d have a fixed yearly budget, so the doctors would have stop needless tests / treatments.

It’s a BOLD move, it is single payer – and it will house everybody who doesn’t have insurance.

And importantly it lets those who have the money to spend, buy all the extra crap their doctor can sell them on.

and overuse of the system by the middle class which has private insurance, for trivial matters because they don't see the costs other than a copayment.

Read Hilzoy's article.

Ordering excessive tests and procedures is a huge problem, but that's driven by doctors not patients. And no, it's not because of malpractice liability or "gold plated" health insurance plans either.

Comparative effectiveness research is hugely important. And doctors really need to be on salary.

(Also, it's fallacious to assume there has to be one explanation, and you can just ignore the smaller ones - high administrative and drug costs, and Medicare's demographic responsibility collectively explain a lot.)

Comment on that source: Sebastian's misread it slightly. 7% is "program administrative costs" - that may well be just the cost of running the insurance company and Medicare head offices, and not include the costs of running a for-profit hospital or medical practice; all the administrators and accountants and bill collectors and marketing people that a hospital just wouldn't need under a different system. So you can cut a chunk off the sections marked "hospital care" and "physician/clinical" as well.

Drug spending: don't forget that US drug prices are hugely inflated by advertising and other factors; the NHS spends 8% of its budget on drugs (and its budget is half the size in terms of GDP, don't forget) so you could cut at least half the drugs bill.

Poor preventative care: which means that the uninsured come to ERs rather than being treated earlier.

overuse of the system by the middle class which has private insurance, for trivial matters because they don't see the costs other than a copayment

He was sounding so sensible up to that point. I really don't think that many people use the health care system for fun. The overuse is more likely to be overprescription and overtreatment by doctors acting from financial motives, rather than frivolous use.

Doctors' salaries are doubtless higher in the US, but there are only about 800 000 doctors in the US. The average British doctor gets paid about $70k; the average American doctor gets paid roughly $100k. That only makes $24 billion of the US budget due to the higher salaries of American doctors - that's nothing compared to the several trillion dollars spent on healthcare.

What about quality of health care? Are those other countries spending less because they're getting less quality health care? I've heard of Canadians coming to the US for their more serious procedures. Spending less on health care sounds good, but can we spend less and provide universal cooverage without significantly sacrificing quality?

Quality of care in Canada, as in just about every country with universal health care, is better on average than in the U.S. For those who are very wealthy, however, they can probably get better care in America (or, at least faster care) than elsewhere.

But I recommend the article that hilzoy links to above. Even within the U.S., counties that spend more on health care do not have better outcomes than counties who spend less.

It is interesting that overuse is usually attributed, as Sebastian does, to cost insensitivity on the part of insured patients. Yet, as Gawande makes clear, this can also arise from doctors' economic interests. This is not the defensive medicine that draws some complaints, but rather the fact that patients are seen as revenue sources. More tests mean more money for the physician. This is clearly not universal, but when the Mayo Clinic spends less than half per Medicare enrollee than is spent in McAllen, TX, there is something going on.

To the extent that insurance companies focus on needed rather than preventive care, as John Miller says, this is probably partly a consequence of the fragmented insurance system. The insurer is not going to get the full benefit of preventive care, because there is a fair chance that the patient will have different insurace by the time the payoff - lower future costs - appears. It seems like a straightforward and logical consequence of the current system, made worse by the fact that Medicare is ultimately a sink for patients.

IMO, we need to see health insurance as a lifelong proposition, not a year-to-year deal like car or homeowners insurance. This can imply levelling payments somewhat. You overpay a bit when young and underpay when older. (Note that employer-based plans generally do this now.) It also implies that the insurer has a financial interest in your lifelong health, not just what happens this year.

I mean no offense, but it is relatively common knowledge among public health policy geeks that the U.S. spends larger proportions (measured by GDP) than other developed nations. This is in part why I and others are generally deeply unsympathetic to the horror stories of nations featuring universal coverage. One of the most well-known criticisms of the UK health care system -- which, whatever its flaws, is indubitably a system, unlike our own fragmented monstrosity -- is that the UK simply does not spend as much as it ought to (note the normative claim) on health care.

This criticism came from within UK policy and health care stakeholders, and certainly provides ammunition to the proponents of universal coverage that the Chicken Littling of opponents of universal coverage in other developed nations are (counterfactually, of course) inapplicable to the U.S. because if the U.S. were to continue to expend significant proportions of GDP on health and instituted universal coverage, the insufficiencies of supply could be largely avoided.

(Indeed, we have mountains of evidence strongly suggesting, as you note in this post, we have an overabundance of supply of health care services in the U.S., though it certainly is not distributed equitably).

Last point: it is critical to avoid the mistake that so many experts make in simply assuming the robustness of the connection between health care and health. We have excellent evidence that this connection is far more tenuous than is simply assumed (much of which I discuss on my blog and in my work). Thus, while I certainly endorse the normative basis for extending universal coverage, one ought not confuse this moral claim with the prediction that doing so will substantially improve population health in the U.S. We have very little evidence to justify such a belief, and quite a lot of good evidence to the contrary.

I really don't think that many people use the health care system for fun. The overuse is more likely to be overprescription and overtreatment by doctors acting from financial motives, rather than frivolous use.

I didn't see anything in the post about "fun." The phrase was "overuse...because they don't see the costs." That's both plausible and completely consistent with your explanation. If your auto mechanic says, hey, I think we should test this doohickey, and also says, 'don't worry, the cost is all covered by your service plan,' you're a lot more likely to say yes.

Managed care was supposed to mitigate that sort of abuse by making doctors justify the need for treatment. Of course, this also delayed treatment, drove up administrative costs, and led to good treatment being denied -- how much is impossible to say because doctors had every motive to blame the insurance company for any failure. And one result of that was legal restrictions on the HMOs ability to restrict care, so that we ended up with the worst of both worlds: administrative oversight costs without nearly as much cost savings as promised.

Another factor that drives costs in the U.S. is junk science. Many expensive drugs and even surgical procedures add little if any health value as compared to the older, less-expensive (patent-expired) treatment. But the newer treatment was aggressively marketed and backed by convincing studies in peer-reviewed journals, which these days just are not doing a good gatekeeper job.

I don't know whether that problem is worse in America than in Europe, but I have heard that in single-payer systems, it is more difficult to get a new treatment approved for purchase. In the U.S., drug & equipment companies exploit the fact that once a few big hospitals have adopted a new system, everyone else must in practice follow suit or they will lose customers and lawsuits. So all the marketer has to do is make a first few big sales, which is easy enough to do by offering a discount on other items (or threatening to withdraw an existing discount). The big hospitals have a strong incentive to buy the newest stuff anyway, because they want to look cutting-edge.

The key here is that NONE of the entities that have a motive to limit costs have adequate information. Doctors, patients, administrators, even insurers are simply not competent to judge the value of a new treatment, and neither the government nor private review systems are picking up the slack.

Isn't the overuse-because-of-not-seeing-costs thing a bit tangential? I mean, I agree with it, but it applies to a different problem.

It would cause a difference between a model where everyone paid as needed for treatment, and one where they all paid through an insurance scheme - in the first model, you'd expect to see lower activity simply because people were deterred from treatment through the perception of the cost.

But from a decision-making perspective, a comprehensive insurance scheme you buy into is much the same as a nationalised one you pay for through taxation. If I'm living in the US, and I know I'm fully insured so I don't have to pay directly, I'm certainly much more likely to go and see a doctor or to agree to what that doctor suggests. But if I'm living in the UK, then... well, there aren't any direct costs to me either, so I'm presumably just as likely to go and see the doctor or to agree to what they suggest without quibbling.

As a result, the overall force driving the inflation of activity & thus cost in both cases would be the same, surely?

" the doctors are salaried, so they have no incentive to do needless medical tests."

This is just an anecdote, so take it for what it's worth. My father is an anesthesiologist who spent the final 20 years of his career working at a VA hospital. He used to gripe to no end about how internal medicine people would would futz around all week trying different cures and then, when the weekend came and they wanted a day off, they'd turn the patients over to the surgeons. The surgeons tended to be youngish guys anxious for experience on different types of procedures. The surgeons would then spend the weekend doing heroic procedures on old guys in near total system failure. (My father, of course, didn't like this because he was forced to work the weekend). The surgeries were said to be in order to prolong the lives of the old guys but were probably more to augment the experience of the surgeons. The surgeons were salaried and thus made no extra money doing the perhaps needless procedures. But the added experience made it more likely that the surgeons could claim richer or more prestigious spots when they leave the VA.

Health-insurance companies - whatever their original roles and goals - now exist primarily to squeeze as much money out of the provision of health-care as they can devise ways to accomplish.

I very much fear that every attempt to rebuild health-care without materially impacting the insurance companies will fail badly - and expensively. It's like trying to ban heroin without affecting the incomes of heroin-sellers.

In the simplest terms possible, we need to decide: are we going to renovate health care, or are we going to protect the insurance companies? And that means, we need to choose: the US citizenry, or the too-often predatory industries that have become accustomed to feeding on the lives of every American. Either we're cattle to be managed and culled by those who profit from it - or we're free people whose massed voices MUST drown out preference for their predators...before it's too late.

Insurance companies are run to make a profit, the VA isn't. Which leads to tons of perverse incentives and insurance companies fighting against paying for procedures, and also means there HAS to be an extra markup in the cost of insurance above what's needed to cover the costs.

Paperwork results from having a zillion different insurance companies, so doctors and hospitals have to have extra people to sort the specific paperwork for each different company, and keep all those records straight, and also creates an equal legion of paperwork sorting at the insurance companies. Single payer programs don't have that problem, one insurer for everybody to deal with. There's still paperwork, but it cuts down on the duplication.

Not to mention the perverse incentives that keep people stuck in jobs to keep the insurance, instead of allowing them to strike out on their own to create new companies and unleash the entrepreneurial magic of the free market in new and unkown ways.

Yes, of course. But what makes you think that the overseers who will design incentives for the medical industry will do a better job than the overseers who designed incentives for potato production. (potato production being a euphemism for soviet failed industry).

d3dave- Why is it that you choose to compare socialized medicine to the Soviet system rather that to Western European systems. Are there particular historical circumstances that make you think that the Soviet comparison is more apt? What factors govern your choice of exemplars?

You make a good point. Western European systems may be just as 'socialized'.

But I think my point still holds true. Perverse incentives can just as easily be imbedded in a socialized medical system as a non-socialized medical system. They may be different perverse incentives; but still perverse.

When my second daughter was born, she was a few weeks early, but perfectly healthy except for an elevated bilirubin count. Our first daughter who was born in Germany in an Army hospital was earlier, much smaller, and a higher bilirubin.

The first daughter had to have a few extra blood tests than would be normal, and we were advised to "put her in some sunshine." This worked fine.

The second daughter, born in a US hospital with a neonatal unit, was wisked away to the premie ward, not allowed to be held, and had tubes stuck throughout her. The neonatal bed cost ten times more per day than if she had simply shared her mother's room (not including actual treatments).

At the time, I was certain that the only reason that my second daughter was in the ward was because the ward had an open bed, and I had insurance...but I was not certain enough to unhook her myself and go home. However, as soon as another baby came in that needed the bed, she was unhooked, and we were put on what I considered a more normal course of care.

While obviously just an anecdote, I think it is an example of how consumers of medicine, even when they have some basis for believing care is unnecessary, really are not in a position to argue.

On the other hand, one of the problems with the Army care is that it was much more restrictive: for example, the Army would not provide an ultrasound unless there was some specific reason for it (like preeclamsia, a previous problem, etc). It was frustrating when at the time, ultrasound was a normal course for most private insurers, and gives peace of mind to expectant parents that things are going well.

Daughters 3 and 4 had private insurance (the first two were either Army care or Army insurance) and both had significantly better care (like at home light treatments for bilirubin, excellent and responsive nurses in the birth center, physicians who gave explanations and choices). Technology had changed over the decade, so perhaps they would have received similar care under Army medicine, but having experienced government direct care, government insured care, and private insured care, I am much more satisfied with the private insured care. When I was back on active duty last year, we chose to keep paying for our private insurance rather than use the military medical system which had caused so much frustration.

While I recognize that any new system will not necessarily take military medicine as a model, it is one area where the government does currently run a medical system that provides care for families, and it is not one I would choose to use given other options. Though as a plug for the reserves, we are using it now since the economy cost my wife her job, and I can insure 7 people for $180 a month...which beats the hell out of Cobra.

Why socialized (i.e. government run), rather than Not-for-profit? I've used not-for-profit medical institutions for years and they are all high quality systems.

I agree with jrudkis and others, if we go to a UHC system, the most effective way to do it would be to emulate the military or the VA. One of the things I appreciated about the military system was, if you were a member and you needed to go to sick call, you'd better be sick, or there'd be hell to pay. If you were a dependent using a military hospital for stupid crap, there'd be hell to pay. Basically, if you were abusing the system, you were in trouble. The VA is a bit more forgiving, but being not-for-profit does help, although even though I'm a disabled vet, I try not to use the VA. I have private insurance and I use that as much as I can. I leave the VA resources for those who truly need it.

As for other ideas, Frontline had a great piece on last year. The site is here with a quick overview of the show. It's worth looking at (I like the Swiss model).

Exactly. Using the word with Mailer's original meaning would be more confusing these days than using it as Sebastian did. I also don't understand the suggestion to replace the word with fact, which does not carry the intended nuance.

my personal favorite method for bringing up the number of medical personnel & down the costs thereof:

- revitalize the county health clinics of decades ago;
- bring each one to the level of a decent doc-in-the-box

- those who wish to be doctors, nurses, etc join the Health Service, live in barracks (or close enough) with other students, have their school and living expenses provided. Upon graduation they repay their expenses by serving as a physician in a County Health Clinic for 10 years. They continue living in Service housing but are now paid modestly - enough to save up toward opening a private practice after they've repaid their education, but this is the payback period, not the profit period, so modest.

This would rebuild the public-health infrastructure we once had, and improve on it; it would ee students from the insane financial pressure, provide a lengthy residency with plenty of opportunity for specialization, and feed directly into a profitable, high-end private medical milieu.

It would free mainline hospital emergency rooms of non-emergency congestion, make sure that basic health services could be provided 'in bulk', leaving for-profit medicine to do research, develop new techniques & protocols,, design drugs, save the world, whatever. It would not indemnify those who depend on the public till for their loss of access to it - but nothing's perfect.

Madrocketscientist: Why socialized (i.e. government run), rather than Not-for-profit?

Because socialized health care - ie, paid for by everybody, used by everybody except those who want private health care as an add-on extra - is the most efficient in terms of making sure everyone gets taken care of.

The larger the population you have to deal with, the more easy it is to figure out accurately what resources you are most likely to need in advance of your needing them.

Health care is exactly what the Marxist dictum "From each according to their ability, to each according to their need" was made for.

I'm not saying the NHS is perfect. But the UK achieves better results than the US on less money than the US, with a system that is about as low on bureaucracy for both staff and patients as you could conceive of.

There must be a link between the failure of Soviet potato production, an American single-payer health plan, pommes frites, the fairly successful and efficient French healthcare system, freedom fries, the Bush II War in Iraq, McDonald's french fries, overweight and underweight and underinsured folks seeking too-late help at American hospital emergency rooms, the Irish potato famine, pre-existing conditions, overproduction of potatoes in America because of vichyssoise subsidies and the pronunciation of "potato" with an elitist short "a".

Sort of a unified theory of everything in which perfectly moderate alterations in our hopelessly complicated, expensive, arbitrary heatlhcare system can be derailed by any old reference to potatoes.

"reporting on the state of something is not the same as speaking for it."

It's interesting that you are able to objectively report on the subjectivity of language.

My own claims remain only subjective, and I claim that I carry on a flaming affair with the language, and at night it whispers to me its fondness for its lovers who treat it with precision and skill. When people speak in favor of using it carelessly, and support their desire with a claim that the language is indifferent to being so used, the language confides in me that it will never offer such people the pleasures it gives those who use it with excitment, passion, and precision.

But the choice remains a free one, of course, just as you are free to assert that you are objectively reporting differently.

Well, I guess I consume medicine. Years ago it was called "taking your medicine". The consumer model seems to be the wrong one, foisted on us by consumers of our money.

Say you're heading down to the clinic for your first chemo treatment. Do you say to yourself, like you would while you're shopping for and consuming shoes, a Buick, or an ice cream cone, boy I can't wait to shop (hey, make me an offer; is that your best price?) for those chemicals in bags. We'll stop by for a nightcap of radiation, honey, and then go home and lose our hair and vomit till the bile runs clear.

If I was a consumer of chemotherapy, which I'm not, by the way, it seems I would find the most delicious and satisfying chemo and keep going back for more.

But I don't and neither does anyone else. Because we aren't consuming medicine. Medicine consumes us.

Next week, we'll cover root canals and colonoscopies and their resemblance to Stalin's methods in the Ukraine, not to mention how President Obama's choice of dozens of private healthcare plans in the Federal Employee healthcare system resembles nothing so much as a simple delicious subsidized Idaho potato prepared 38 ways.

Or, put in short form: requiring health care systems to be run profitably ensures that they will be run expensively. If you want best-quality healthcare at lowest cost, you need socialized health care: nothing else will do it.

You say a for-profit medical system is bad, I agree to a certain extent (profit also drives medical research). However, socialized health care is not the only way to operate a not-for-profit health care system, and that is what you were addressing. Also, covering everyone can be done without socializing the system.

I recall having a long discussion around 30 years ago with my boss at the time, who had written a letter to the New York Times bemoaning the fact that his doctor had, in response to his question about the cost of some procedure, responded [I'm paraphrasing, now], "what do you care? You're insured."

Fast forward to today and what do we have? A system nearly in collapse.

In my view, doctors brought this on themselves to some extent -- there was so much money involved that the sharks moved in. Couple it with the stereotypical depiction of the all-knowing, arrogant M.D. and you go a long way toward explaining the current mess.

Even Frank Luntz tacitly admits to the current state of affairs as being a crisis, and is advising Republicans to adopt and co-opt that term.

In my opinion the only possible remedy to the perverse incentives currently driving the system is single-payer. Yes, we will have to guard against new perverse incentives. That is no excuse for inaction.

In other threads, too, I've seen the point of view advanced that any government action will make matters worse, ascribed in so many words to the corrupting influence of power on politicians. To be sure, politicians seek power. What else is new? Businessmen seek money. The sun rises in the east. Water is wet.

To throw up one's hands and claim this is the best we can do is no answer as far as I'm concerned. The current system has failed.

But even a 'not for profit' hospital is required to be run profitably. Large capital projects require the floating of bonds and bond holders rightly demand a return on their investment. The 'non profit' hospital where I work invariably follows a building addition or renovation with lay-offs within a year.

In most countries, including a respectable number of otherwise "socialist" countries, potato farming works like this: you beg, borrow, buy or rent some land. And you buy or find some seed potatoes. You dig the land into trenches, plant the potatoes, in the hills, water the plants from time to time, and two or three months later, you have potatoes. You can sell them to anyone who will buy them. If none of the local food stores will take them, you can set up a roadside stand. You don't even have to sell the potatoes you grow; you can give them away to friends or eat them yourself.

Now, if potato farming worked the way medicine works in the hyper-capitalist United States (and in most other countries), you would have to pass a long and rigorous training course before you could even touch a potato or a bare patch of earth. And the other potato farmers would have to "accredit" any school you attended. Once you got out of school, you might have to specialize in a particular farming method or potato variety. The same group of fellow potato farmers would have to inspect, or "accredit" your farm. And if you refused to play along, the police could arrest you for potato farming without a license.

Milton Friedman, among others, suggested we should run the medical system the way we now do potato farming. Others consider that a terrible idea, and want to keep the system as it stands, pointing out that, as a task, potato farming differs a lot from medicine. Whichever you agree with, potato farming manifestly does currently differ from medicine, so it hardly makes sense to assume that socialized medicine would produce the same results as socialized potato farming.

How much correlation is there between how much a country spends on healthcare and how healthy its citizens are? I've never seen this considered in these health care cost comparisons. Is it possible that one of the reasons that we spend more on healthcare for worse results is that we are simply not healthy?

If so, I prescribe that 6 weeks of vacation time per year be adopted as the new community standard.

On a different note: until language police carry guns, words will mean what people want them to mean.

There is one respect in which the doctors' compensation component of the cost of health care could at least partially explain the increasing share of GDP that the industry comprises: Baumol's Cost Disease.

Advances in medical technology tend to focus on efficacy rather than efficiency. So whereas in other industries innovation increases average productivity (output/worker), innovation in medicine decreases mortality/morbidity (which I suppose could be characterized as *increased productivity*, although it's an increase in productivity that doesn't really translate into savings in the cost of production); it makes our doctors more effective in saving lives and improving quality of life without regard to efficiency. So, all things being equal, relative to the cost of labor component of other industries, the cost of labor component in health care is ever increasing.

However, regarding Adam Collyer's excellent point above about the excessive costs of entry into professional careers, I recall reading an interesting idea in a book by the economist Robert Shiller a few years ago that might help take some pressure off professionals like doctors to pursue high remuneration in order to pay back tons of student debt: income-linked loans. They're loans that have a payback formula based on a percentage of monthly after-tax income of the borrower, rather than an absolute dollar payment. If the newly-minted physician was only burdened with a certain, managable, monthly payment on his or her loan, the pressure to seek a very high income would presumably be greatly reduced.

Madrocketscience: I agree to a certain extent (profit also drives medical research)

Yes indeed, in a very bad direction, yes?

The AIDS cocktail that keeps people alive for longer is wonderful - and profitable: an AIDS vaccine wouldn't be profitable, but would save more lives.

Also, covering everyone can be done without socializing the system.

But not as cheaply, efficiently, and effectively. (The NHS is first in the world for covering everybody: and somewhere around number 10 or 11 in overall quality. Which I think we would likely do better on if, at the time WHO was doing the survey, the NHS hadn't been starved of resources by a Conservative government for years...)

"It would take a lot of potatoes to cook one, I think. Not very efficient."

It would probably take even more potatoes to power the still to turn the potatoes into alcohol you could uses as fuel to power the still, but I'm sure if we keep working on it we'll eventually get to perpetual motion. We've just gotta work harder.

Well, in several European countries, like Finland and Sweden, the Med. school is free of charge. The state even throws in a student grant and guarantees a student loan (totaling ca. 1000 EUR a month), to pay for the books and cost of living.

The US-type post-graduate medical school is not even a necessary thing. The Nordic-type medical education begins from the high-school diploma level, covering the pre-med stuff during the first two years. (The high school in Nordic countries is a year longer than in the US.) A high school graduate becomes a physician in six years. (The same goes for the law-school, too, but it takes only five years after high school.)

More seriously: I had a friend who died of AIDS, sixteen years and seven months ago. I know he would likely never have lived to benefit from the cocktail of drugs that keeps people alive today. But he might have lived a little longer, but he took part in an early clinical trial, and that not only didn't help: he got worse. He got worse a lot faster, perhaps, than he might have done.

A friend with more loyalty than sense asked him why he didn't sue the doctors who had fitted him into the clinical trial, and though I don't know what he told the friend, I know what he told me when reporting the conversation: he had wanted to be in that trial: he had hoped it would help.

And though it didn't help him, well, it's no bloody comfort at all, it never has been, but some clinical trials on the way to the development of a new treatment will fail. And the only way to try them out is with volunteers who are already sick. My friend was one of those volunteers. He did it because he hoped it would keep him alive longer, but he didn't do it out of any profit motive: and nor did the NHS doctors who had been asked to help with the clinical trial and who needed to ask patients to volunteer.

The idea that Madrocketscientist and Sebastian have presented, MRs in this thread, Sebastian in other threads, that medical research in the US is all about profit and profit-driven and this is how the US leads the world: People all over the world do medical research. Some people like my friend who died do it with their bodies, volunteers: some of them do it because they're on a government salary, being provided with taxpayer funds to do it, and they want to do it.

...and some of them are probably doing it with an eye to profit. But they're not necessarily the most successful researchers.

I would not dismiss the 'consumer' aspect as 'going to the doctor for fun'. There are many people that visit doctors without physical needs and not all of them are just hypochondriacs. They just 'need' to be taken personally care of by that trusted professional from time to time independent of their actual health. Then there are many that 'want to get something for their money'. It's the type of people that hates the idea that they pay more into the system than they get out of it. A (small but expensive) minority also loves to brag what extraordinary treatment/medical exams they got and it has to be the newest and most fancy stuff available (I guess though that this is more a US than European vice).

I don't know whether that problem is worse in America than in Europe, but I have heard that in single-payer systems, it is more difficult to get a new treatment approved for purchase.

Of course it is. That's because new treatments (particularly new drug treatments) need to be shown to work and be cost effective first.

There aren't many things I agree with Jesurgislac about, but the NHS is one of them. It's how to run a very effective healthcare service on the cheap (although New Labour have managed to introduce more than a few perverse incentives in the name of market-based efficiency).

And per capita the UK holds its own with the US despite the much lower funding in both pharmaceutical and general medical research. (And that's despite the pharmacy companies hating the NHS - the NHS is big enough to strongarm the pharmacy companies, can buy from e.g. Greece under EU law if it's cheaper, and NICE makes the NHS a notoriously late adopter of new and in particular expensive drugs - which is a feature, not a bug).

Dave, it's not that there are no perverse incentives in a decent socialised medical system. It's that the system isn't run almost entirely on them.

True story: in the late 1980s, Paul Tsongas, the conservative democrat candidate for president, made the claim that he might not have survived his bout with cancer if he had only the Canadian medicare system to fall back on. Big mistake; it turns out that the treatment that prolonged his life came out of a research program run at the Princess Margaret Hospital in Toronto.

Anyway, based on my own interactions with the health care industry, some suggestions:

1. It seems clear that an awful lot of the difference in health between developed nations, and hence differences in health care costs, are due to lifestyle issues; Primarilly diet, exercise, and vices. And really don't have a lot to do with the way their health care delivery is organized.

But I've never had health insurance that lifted a finger to provide me with incentives to change my lifestyle. (Which isn't awful, but could be better.) Why is this?

Granted, you'd think that not croaking at an early age would be a pretty good incentive, but I guess most people just don't think that far down the road.

What's keeping this from happening?

2. We really need to get doctors out of the loop. Way too much of my interaction with doctors could have been handled by a lower paid person, or even automation. Why'd I have to see a doctor just to have some blood work done, and again to have him read the results to me?

Automation is key, you don't wring cost out of a highly labor intensive industry without it. And there are few industries as labor intensive as medicine. (Unless it's education, which could also benefit from more automation.)

We need the "autodoc" of SF fame, even if it's limited to tests and routine diagnosis.

Besides, medicine is getting inhumanly complicated, too far beyond the capacity of one person to grasp all of it. Initial diagnosis should really be handled by expert systems, they've got no limit on their complexity, and can be updated every night, instead of every 6-12 months.

Why'd I have to see a doctor just to have some blood work done, and again to have him read the results to me?

Why indeed? In the NHS, more and more work of this kind is done by nurse practitioners.

(The last time I had to have blood work done, the blood was taken by a phlebotomist, which I greatly prefer because frankly they're better at it and I do not care for having someone futz around in my arm trying to find the vein: but yeah, I didn't care whether it was my GP or the practice nurse who gave me the results, though I did want them explained to me by someone who knew what all the little numbers actually meant.)

jesurgislac (is that a name, or a word, how do you pronounce it, I'm honestly curious?)

I do agree that not all profit driven research is good, but a lot of it is. We'd not have MRIs or CT scanners if companies like GE didn't see a profit in the technology. And honestly, if there wasn't a profit in it, we'd likely just now be getting the AIDS cocktail going and there'd be little effort in looking for the cure.

Why do I say this? Because if there is one thing we ALL should have learned from the Bush administration, is that allowing politicians to dictate the course of medical research is a bad thing. How long did it take before people started to think of AIDS as something horrible that needs to be fought, rather than just a disease that kills fags and druggies? How many people STILL think that way? Luckily, we had for-profit research that did not depend on government funds to keep looking into embryonic stem cells. Also, a lot of Universities do for-profit research. It may not be to get profit like GE would get, but they still patent technologies and drugs and enforce those patents aggressively so they can make money to further fund the University. Having a healthy mix of profit driven, not-for-profit, and government funded research means a lot of bases get covered, even politically sensitive ones.

Also, I look at Oregon, which is making a list of what conditions are covered by it's health plan.

Hope you don't get Liver Cancer in Oregon. Granted, private insurance is not always much better about covering things, but let's all be realistic, UHC WILL NOT cover everything for everyone, and it will have to be rationed, we are too big for it to be otherwise. The UK has 60 million people, much higher taxes than we do, and the NHS is still financially strained. We have 300 million people, a rather large percentage of them DO NOT want an NHS style system, even if they do want some kind of Health Safety Net, which means you'll have a hell of a time selling it.

Madrocketscientist: We'd not have MRIs or CT scanners if companies like GE didn't see a profit in the technology.

That's a simplification so extreme as to be, not to put a fine a point on it, untrue. The development of MRIs spanned decades, involved many researchers from multiple fields, and trying to claim it was "profit-driven" is... just plain untrue. More information, if you're interested. (Desire-for-a-Nobel-Prize-driven, yes, at least in part: but while the cash part of the prize is definitely a plus point, I do not believe you could rationally describe it as a "profit motive".)

? Because if there is one thing we ALL should have learned from the Bush administration, is that allowing politicians to dictate the course of medical research is a bad thing.

True. But if we didn't allow tax-funded research to fund things the government thinks might come in handy but that turn out to havew wider applications than anyone first thought of, you and I wouldn't be having this conversation - because there wouldn't be an Internet. Neither the Internet nor the World Wide Web would have come about by private enterprise - and neither MRIs nor the AIDS cocktail would never have come about if private companies had been stuck researching on their own lines strictly for corporate profit, with their only experimental subjects people who had to take the chance because the corporations were willing to pay them, and not allowed to share their research with other scientists working for rival companies.

Luckily, we had for-profit research that did not depend on government funds to keep looking into embryonic stem cells.

Huh. Luckily, Americans could work from the research going on in other countries, not stifled by the theocracy you had from 2000-2008. The Bush administration proved that the US is liable to have religious, anti-scientific government, and scientists who want to work in stem-cell research probably need to consider leaving for a country which doesn't permit religion to dictate what tax-funded research will or will not be carried on: but it did not prove that the only good research is that done for profit, because government-funded research continued to happen in countries which didn't have a Bush administration stifling research.

Don't know if I'm replying to the real SDG or crypto-SDG, but I think the question you need to ask here is "care of what"?

When I see the doctor, I always see a NP first. Blood pressure, weight, blood oxygen level, simple in-office tests, are all given by the NP.

If I go in for something other than my physical -- stepped on a nail, what's this weird thing on my head, etc -- I typically see an NP first for a basic triage of whether the doctor needs to jump in, or whether I can be sent home with a band aid.

There is a lot of basic care that is quite helpful but doesn't require an MD.

Mrs: We have 300 million people, a rather large percentage of them DO NOT want an NHS style system, even if they do want some kind of Health Safety Net, which means you'll have a hell of a time selling it.

Well, members of Congress seem to like their NHS style system very much indeed. And as they're the ones who would actually vote in an NHS style system for everyone else, I guess the thing to do is to convince members of Congress that the other 300 million people in the US would very much prefer to have the same kind of health care system as they themselves enjoy - and show no signs of trying to get rid of.

I sincerely doubt, by the way, that the "very large percentage" who claim they would hate to have an NHS style system in the US really mean that they would hate to be able to have whatver healthcare they needed free, whenever they needed it, and without worrying about insurance costs, co-pays, being denied bankruptcy while spiralling into debt.

Hands up: how many Americans here would hate to be able to get any prescription drug they needed either free or at a cost of $8.50 per scrip?

Currently tens of millions of Americans are covered for nothing, and health care is rationed for almost everyone

What Gary said. Would you rather risk cancer in Oregon, or risk cancer while poor and/or uninsured?

I imagine liver cancer is not covered because of some combination of: very rare, very expensive, and very non-survivable even if treated.

I remember there was a fuss a few years back about a young woman with cystic fibrosis who was not covered by the Oregon plan for a duel heart/lung transplant. Thing is, it's not the state plan that's being heartless, it's just the statistics: chances are such a transplant would only extend her life a few months, and it's terrifically risky at that. And even more terrifically expensive. For the price of one such hyper-expensive transplant, you can vaccinate thousands and thousands of children, or mend tens of thousands of broken arms, or provide thousands and thousands of insulin shots.

That's a simplification so extreme as to be, not to put a fine a point on it, untrue.

Actually, it isn't. I've read a very detailed history of the development and commercialization of the CT & MRI technology (I think it was in the Harvard Business Review, I'd include a citation, but I don't have it handy since I'm at work), and the motive for profit was one of the driving forces that encouraged companies like GE to improve, build, and distribute CT & MRI scanners.

Also, despite having stated a few times now that I support a wide range of options for paying for medical research, you seem to be of the idea that I think ONLY profit driven research is worth anything. So, I will say it again, I think a balanced mix is best. Government supports what is politically favored, corporations support what will turn a profit, and Universities generally go after what is left.

I remember reading about a University gent who figured out a way to trick bacteria into producing the cure for Malaria, a cure that until now has only been available through a massively expensive process. He can make medicine for pennies a dose instead of dollars, and he made certain that the University will only charge for the cost to make and distribute it, without a profit margin. I can't help but admire the man and the work, and if he helps to reduce or rid the world of Malaria, I hope his name is honored for all time (not likely, us scientists always get left out).

Also, America should not have to rely on work in other countries because our government got stupid.

Finally, I never said people would hate a NHS system, only that they don't want one (two different things). And if you think that our Congress members are interested in making sure the US people have the same health plan that they do, your are a bigger idealist that I thought. No, congress will vote in the bare minimum that will allow them to keep their jobs, which means they are gonna look long and hard at the cost. The Fed.gov can easily afford outstanding health care for 535 persons. Paying for 300 million (or even for 45 million) is a different ball of wax. The American people would like UHC, but most of them understand that such a system will be expensive, and they are aware enough that we are broke.

"Well, members of Congress seem to like their NHS style system very much indeed."

Might be interesting to inquire into how much their NHS style system is costing per person covered, and whether it would bankrupt the country to try to extend it to everyone else. Congress has a pretty nifty retirement program, too, but you could never afford to replace SS with it.

and the motive for profit was one of the driving forces that encouraged companies like GE to improve, build, and distribute CT & MRI scanners.

D'oh. Sure. But he wasn't the sole person responsible for all the scientific research that made CT / MRI scanners possible - and I really doubt he did it all because he was thinking PROFIT!!!!

(And Atkinson Morley's Hospital, where the first CT scans were performed, is and was an NHS hospital...)

So, I will say it again, I think a balanced mix is best.

Nice to know you don't object to corporations profiting from tax-funded research...

Also, America should not have to rely on work in other countries because our government got stupid.

Shouldn't, but so long as you have a broken electoral system that enables the religious right to get more power for their anti-science nutcases than the electorate support, you will have to depend on countries where the religious right are random nutcases without political power. Every political choice has its penalties. If you like having strongly right-wing government, you have to accept theocratic nutcases will use that to get into power.

Finally, I never said people would hate a NHS system, only that they don't want one (two different things). And if you think that our Congress members are interested in making sure the US people have the same health plan that they do, your are a bigger idealist that I thought.

No, I'm just more sarcastic than you can imagine. People who imagine they don't want the health care they need free at point of access, paid for by taxes, minimal bureaucracy, need to consider why members of Congress have shown nil interest in switching from their NHS-style system to the system they impose on their constituents.

The Fed.gov can easily afford outstanding health care for 535 persons. Paying for 300 million (or even for 45 million) is a different ball of wax.

For the price of one such hyper-expensive transplant, you can vaccinate thousands and thousands of children, or mend tens of thousands of broken arms, or provide thousands and thousands of insulin shots.

Every treatment is a case of cost benefit analysis, which makes sense to accountants and actuaries (and you and me), but not a whole lot to people who are holding on to the barest hope. You might be OK with not covering Liver Cancer, until you get Liver Cancer.

Might be interesting to inquire into how much their NHS style system is costing per person covered, and whether it would bankrupt the country to try to extend it to everyone else. Congress has a pretty nifty retirement program, too, but you could never afford to replace SS with it.

I find 1998 figures saying FEHBP cost $3960 a person, which I think is actually just about US per capita health spending for that year. So at least it probably wouldn't cost any more to give Congress' health benefits to everyone.

But note that FEHBP is NOT socialized. It's basically just good employer-based coverage, and you get to pick from a bunch of insurers.

Best models for socialized care are probably NHS or VA, and we already know they're far cheaper (and in many ways more effective).